Ford can make it. In my opinion Ford can manage to make decent earnings, can bring its debt out of its junk status and can even stop loosing market shares to Toyota and friends.

For a company priced 0.07 times its sales it would mean a big big gain for stock holders, considering for instance that Toyota has a 16 times higher price of 1.11 times its sales.

Why do I think F can make it? Several reasons, among which the most original and interesting is that even little and troubled Italian car constructor Fiat (FIA) seems to have made it. Apparently FIAT has moved from red to black, has increased its sales, maybe (I am not sure) even increased its market share and, last but not least, FIA has seen its stock price double in a year.

How did that little miracle happen and how could it be repeated in Detroit? Fiat’s miracle had several ingredients:

1) Moving construction Plants to developing countries. Fiat moved them to Brazil, Turkey, Poland, India… I don’t see why Ford would not do something like that, specially considering that its worker’s unions are not helping a lot, nor is US Government. They could aggressively meet union leaders and government politicians and ask plainly: what will you give us to stop us producing in Vietnam?

2) Negotiating with banks, with governmental support. Ford has a huge debt, but most of it seems to be money given at higher interest rates to car buyers. It seems stupid to me that this debt should be rated as junk. They could find ways to separate debt of car buyers, which should not be considered junk, from debt of money used to build new plants or to compensate past losses, which can be considered junk maybe. GM has been looking for a way to separate those very different debts selling GMAC, but if it is not sure it is succeeding. They will find a way.

3) Copying the Japanese constructors. Fiat hired armies of consultants to learn how to copy Japanese. Ford can easily hire enough consultants to help to copy the same Japanese that copied Ford in the past. I don’t see why not. I think Fiat did so too. Probably both Ford and Toyota will have to place plants in China India &Co, so Ford should simply do so copying what Toyota does. Consultants are for that.

But that was just a nonsense crazy theory of mine. What really convinced me to buy F stock today is the usual Yahoo data: http://finance.yahoo.com/q/ks?s=F

Trailing P/E: 6.53 and forward P/E: 10.69 seem both good.

Price/Sales: 0.07 seems very cheap. It is even the same as loss builder GM, which is much worse than Ford in many ways.

Dividend yield of 5,80% seems juicy to me, considering that F is making some earnings now and will probably be able to pay dividends in the future.

I was so convinced by my own crazy reasoning this time, that I bought 150 Ford (F) at USD 6.85 for a total price of $102750. Let the force be with me and good luck to you all fellow democratic proletarian investors!

The only thing that makes me feel good investing my money in such clueless way, is the fact that I read that a monkey throwing a dart on the financial page of a newspaper has the same chance to invest well that an Harvard graduated finance guru… I should place myself somewhere between the guru and the monkey, so I shouldn’t do too wrong!